Australia Sues Westpac Over Negligence in Handling Financial Hardship Notices

Australia's corporate regulator, the Australian Securities and Investments Commission (ASIC), has taken legal action against Westpac Banking Corp for alleged negligence in responding to customers' financial hardship notices. The lawsuit stems from Westpac's failure to adhere to administrative timelines between 2015 and 2022 regarding these notices.

Regulatory Failure

Under Australia's National Credit Code, creditors must respond in writing within 21 days when customers request changes to their credit contracts due to financial hardship. ASIC contends that Westpac's online hardship notice system led to 229 customers not receiving timely responses.

Market Impact

Shares of Westpac saw a nearly 1% drop to A$21.630 following the news, in contrast to a 0.6% fall in the

broader market index. This development highlights the increasing regulatory scrutiny faced by Australian banks, including recent probes into data on fees charged to indigenous customers, compliance with home loan guidance, and handling of bank scams.

Expert Opinion

Damian Rooney, director of equity sales at Argonaut, commented on the situation, stating that heightened regulatory scrutiny is justified and politically advantageous for authorities. It aligns with the broader sentiment of holding financial institutions accountable.

Remediation Efforts

Westpac acknowledged the issue as a "technology failure" and has since completed a remediation program for affected customers. This includes non-financial loss payments totaling about AU$900,000 ($581,310.00). Westpac's Chief Information Officer, Scott Collary, expressed remorse for the error, acknowledging that it had hindered some customers from receiving the necessary assistance.

This legal action highlights the increasing emphasis on accountability and compliance within the financial industry and underscores the need for banks to rectify their systems promptly to ensure customer welfare and regulatory compliance.

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